Do added benefits such as unlimited annual leave presage the future of workplace relations?
Photograph: Alamy

The recent announcement that communications group STW is offering its consultants unlimited paid annual leave has stirred interest in the business community – although it’s not the first company to do so.

Consulting firm CEB Global estimates that about 9% of companies around the world offer similar arrangements. Netflix does it and so does LinkedIn. And Virgin Management, the parent company of Virgin’s worldwide operations, has offered its top layer of management in the US and the UK extended paid leave since 2014.

“People working at Virgin Management have busy lives and by giving them the flexibility and the opportunities to spend valuable time out of the office, we believe that it has created a happier and more empowered environment, which can be an incentive for some people,” saida spokesperson from Virgin Management in Britain via email, with the company’s trademark enthusiasm.

People use the leave for all sorts of reasons: to spend time with family, or when children are starting school, or to take extended trips overseas. The only caveat is that they must liaise with management and make sure their work is covered. “This added benefit has proved to create increased creativity, productivity and build on the fantastic Virgin culture that already exists,” the spokesperson said.

The question is, though, how much of this is good HR and how much is PR? Do added benefits such as these, offered in the spirit of enhancing work-life balance for the employee and productivity for the company, presage the future of workplace relations? And what happens to company morale when not everyone gets the perk?

Aaron McEwan, HR advisory leader at CEB, is sceptical. “The first thing is, why would a company be interested in doing that?” he says. “Generally it’s about either increasing the engagement of their employees – in other words, retaining their best talent – or being able to attract talent to their organisation. We’ve seen zero evidence to suggest people are attracted to a company that offers unlimited leave, and nor would it make a huge difference to their reason for leaving.”

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What’s more, how many people would be game to take advantage of the offer if the workplace culture rewards over-and-above commitment? Highly motivated people are already unlikely to take the minimum four weeks a year available to them by law in Australia: accrued annual leave is a perennial business problem at all levels of employment. According to one paper, 58% of Australian employees don’t take their full entitlement. And if leaders at the very top of a company don’t provide role modelling for work-life balance initiatives, workplace culture is unlikely to change.

“The likelihood of people taking more leave just because there’s a policy is actually really low,” McEwan says. He adds that take-up of long-standing workplace flexibility arrangements is also quite low.

In STW’s case, the political lobbyists being offered the benefit are very senior, including a former NSW opposition leader and advisors to members of parliament, and their motivation, self-discipline and discretion would be correspondingly high.

As Justin Di Lollo, head of government relations companies at STW Group, told the Australian Financial Review: “This is a scheme for companies with mature people who are emotionally stable, who enjoy doing their work,” he said. “It wouldn’t work with young graduates who are not sure about their work and who are morose about going to work on a Monday morning.”

And so it is with Virgin’s example, where unlimited annual leave is not extended to pilots, flight attendants, mechanics on the ground or general administrative staff. In fact only 170 people were eligible when the plan was launched.

“The problem can arise that how then do the employees who don’t have access to those benefits feel?” Isabel Metz, professor of organisational behaviour at Melbourne University’s Business School, points out. “Are they going to leave the organisation because they don’t have access to similar facilities and flexibility?”

The ramifications of personnel moving to companies they believe to be more equitable are more serious than the short-term nuisance of replacing them. It may create a backlash, Metz says, in company morale. “And it may in the long term impact on the pipeline of talent in the organisation. In a few years time they may have to hire from outside, rather than be able to promote from inside. And it’s always more desirable to manage talent from within.”

American high tech companies pioneered “cool” workplaces. The employment website Glassdoor – motto “Get hired. Love your job”– has Employees’ Choiceawards, which consistently names the usual suspects, including Apple, Facebook, Google and Twitter, as well as start-ups and older companies.

There’s no doubt, Metz confirms, that being famous for having an attractive workplace helps companies attract good staff and has a secondary benefit of broader PR for the company’s brand. However she warns against policies that reflect short-term thinking, even copycat decision-making.

McEwan says flexibility programmes tailored to each employee work better than blanket policies.One person might dream of being able to take extended leave to climb the Himalayas, the next is itching to get back to work halfway through a resort holiday.

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He points to Telstra, which talks about flexibility with new employees as soon as they come through the door. “The company had a long-standing flexibility policy which hasn’t changed, but what they did was deliberately say, ‘we are going to make this policy the default, not an exception’,” he says.

Troy Roderick is general manager for diversity and inclusion at Telstra and helped develop the “All Roles Flex” programme. Any of Telstra’s 30,000 employees, from the CEO to linesmen in the regions, can take advantage of the policy, as long as it doesn’t hold up the organisation’s operations. It is practicable because every manager works with his or her own staff within the company’s broader guidelines. It also answers McEwan’s concerns about leadership role-modelling by promoting work flexibility internally as part of the company’s core values.

It’s about whether the arrangement suits both the company and the employee, “It’s all about whether outcomes can be achieved,” Roderick says, “not whether or not I agree with your particular need for flexibility, whether I think your sporting commitments are less important than your colleague’s parenting responsibilities. We’re trying to refocus it away from value judgements and onto, can we deliver the outcomes that we’re here to deliver as individuals on this team”.

Roderick himself needed to move from Sydney to Canberra for personal reasons, and went to his boss with a plan. They worked it out. “An organisation like ours, which sells technology and flexibility, should be able to enable our people to be mobile and flexible in how we live and work,” he says.

He says flexibility is increasingly going to be part of the workplace as technology, the labour market, and expectations of what work is for, change. The trick will be working out over the long term what really works for both employer and the employee.